German Real Estate Transfer Tax Law Clarified for Partnerships
New German legislation provides legal certainty regarding real estate transfer tax for transactions involving partnerships. Previously, transfers between partners and their partnerships were tax-exempt under certain conditions, a status now clarified by recent changes.
German Real Estate Transfer Tax Law Clarified for Partnerships
A recent legislative update in Germany has clarified the application of real estate transfer tax (Grunderwerbsteuer) for transactions involving partnerships. The changes stem from the "Gesetz zur Modernisierung des Personengesellschaftsrechts" (MoPeG), which abolished the principle of "Gesamthandseigentum" (joint ownership) for partnerships.
Historically, property transfers between partners and their partnerships, or between partnerships with identical ownership, were exempt from real estate transfer tax. This exemption was contingent on a ten-year holding period, or "behaltensfrist," for shares in the acquiring partnership.
With the removal of the "Gesamthandseigentum" concept by MoPeG, uncertainty arose about whether this would automatically nullify the ten-year holding periods. While a transitional rule existed until the end of 2026, it was seen as merely postponing the issue.
The current version of the "Jahressteuergesetz 2024" (Annual Tax Act 2024) now explicitly states that MoPeG does not affect ongoing holding periods. This ensures that past transfers remain valid and allows new transfers to be made tax-free until the end of 2026, providing essential legal certainty for businesses.